Entrepreneurial Risk-Taking in Sustainable Energy: University Spin-Off Firms and Market Introduction in Northwest Europe

Abstract

Universities are cradles of innovation, with many start-ups involved in sustainable energy solutions. The extent in which such solutions reach the market and the kind of risk-related factors young firms encounter, are hardly known and understood. We aim to clarify market introduction and focus on the empirics of firms’ risk-taking behavior related to strategic choices, competences, and interactions with (national) ecosystem conditions. We use a unique dataset of almost 110 university spin-off firms and a small selected sample from this set. A total of 60% of spin-offs are able to reach the market, most of them in the first five years of spin-offs’ lives. Wind energy provides the best chances, as compared to such things as solar photovoltaics (PV) and advanced biomass. In-depth results suggest the high probability of quick market introduction in ‘Innovation Leader’ countries, like Sweden and Denmark, if combined with employing rich collaborative networks. A second set of favorable influences includes a practical mindset and accessing substantial investment capital. In contrast, strong risks tend to be connected to activity in fundamental inventions, highly specialized technology, weakly developed (sub) markets, poorly built networks, and short refunding time of substantial investment. This study provides a unique contribution to understanding the market introduction of sustainable energy solutions and risk-taking in this effort by young high-tech firms, among others, connected to differences between countries.

Municipalities’ Policy on Innovation and Market Introduction in Sustainable Energy: A Focus on Local Young Technology Firms

“…We use data on spin-off firms (a total of 106) in northwest Europe, established since 1998 [19]. The choice of countries-Denmark, Finland and Sweden-is motivated by favorable small firm and innovation conditions that allowed us to observe market introduction and longer term surviving of young technology firms, while Norway and The Netherlands are included as these have faced some less favorable conditions in (some) past years [28][29][30].…”

“…The size of the sample was the outcome of a search process using universities' lists of spin-off firms, national reports on sustainable energy research/application and sector journals, like Nordic Green. We may have overlooked some spin-offs that failed before start of the data collection, but some simulation outcomes indicated no need for concern [19]. Accordingly, we may claim that the 106 firms are to a large extent representative for university spin-off firms involved in energy inventions established since 1998.…”

“…One case in point, specifically emphasizing the role of local citizens, is the urban living lab, as urban sites intended for experimentation, including design, testing and learning from social and technical innovation in a real time and real life setting [9][10][11][12][13][14][15]. While urban living labs have received much attention in literature, young technology firms and their transitional capabilities through energy inventions, seem neglected, however, with a few exceptions [16][17][18][19]. A stronger focus on such firms would provide better understanding of municipalities' organizational and environmental quality for creation of new energy technology and adoption in the market.…”

Governmental Intervention and Its Impact on Growth, Economic Development, and Technology in OECD Countries

“…Renewable energy technology, such as wind and solar, especially the latter, enables more decentralized production and consumption. As some studies have shown, the market introduction of energy inventions is influenced by the energy technology involved, with solar PV (Photo Voltaic) ving more difficulty in the early years than wind energy and energy-saving [64].…”

Urban Policy Response to Radical Innovation in Sustainable Energy: The Case of University Spin-Offs and Local Triple Helix Interaction

“…In the context of fastening energy transition, increasingly, attention is given to the market introduction of more radical technology solutions in cities, for example, created by small spin-off firms at universities [9][10][11] (note 1 1 ). University spin-off firms can easily access new transitional technology, e.g., developed in founders' Master's or Ph.D. work.…”